Accounting Software for Restaurants and Cafés

Accounting software keeps your books: what came in, what went out, what you owe in VAT and what you made. For a restaurant or café it also has to cope with a lot of small sales, several ways of being paid, tips, service charges and food that carries different VAT rates. This guide explains what restaurant accounting software needs to do, compares the main options in the UK, covers Making Tax Digital, and shows how linking your till saves hours each month.

What restaurant accounting software needs to do

Most of the work in a café's books comes from a few jobs:

• Recording takings. Every day's sales, split by how they were paid: cash, card, delivery apps, gift cards and anything else.
• Separating VAT. Sales carry 20% or 0% VAT depending on what was sold and whether it was eaten in, so the VAT has to come through correctly.
• Keeping tips and service charge apart. They are owed to staff and aren't your sales.
• Supplier bills. Food, drink, packaging, utilities and rent, with the VAT you can reclaim.
• Bank reconciliation. Matching your card payouts, cash bankings and bills to your bank account.
• Payroll. Wages, tax, National Insurance and pensions, often through a separate payroll service.
• VAT returns. Submitted to HMRC through software that works with Making Tax Digital.

The main accounting software in the UK

All four of these are cloud software, work with Making Tax Digital for VAT, and are used by many cafés and restaurants. Prices change often, so check each provider's site for current plans.

Xero

Popular with accountants and small businesses, with a large number of add-on apps. Good bank feeds and invoicing. Many UK accountants use it with their clients, which makes sharing books easy.

QuickBooks Online

Widely used by small businesses, with good bank feeds, receipt capture and reports. It has a large share of UK small businesses and many apps connect to it.

Sage Business Cloud Accounting

From a long-established UK accounting company. Familiar to many bookkeepers, with a version for very small businesses and larger options as you grow.

FreeAgent

Aimed at sole traders, freelancers and small limited companies. Some UK business bank accounts include it at no extra cost, which is worth checking before you pay for another option.

Which one to choose

For most cafés, the best accounting software is the one your accountant already uses and your till can send takings to. Ask your accountant first: they will be in the books every month and may get a discount on the subscription. Then check which packages your till system connects to.

Making Tax Digital

Making Tax Digital is HMRC's move to digital records and returns:

• VAT. Every VAT-registered business must keep digital records and file VAT returns through compatible software. This has applied to all VAT-registered businesses since April 2022.
• Income Tax. From April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records and send quarterly updates to HMRC through compatible software. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028.

If you run your café as a sole trader, Making Tax Digital for Income Tax may already apply to you. A limited company files Corporation Tax as before, but still needs Making Tax Digital for VAT once registered.

Getting your takings into the books

The slowest part of most cafés' books is the takings. A common routine looks like this:

1. At close, print the Z-read from the till.
2. Once a week, someone types each day's totals into the accounting software: sales, VAT, cash, card.
3. When the card payouts arrive, they are matched to the days they came from.
4. At the end of the quarter, the accountant checks it all before the VAT return.

There are three ways to make this faster:

• Type in daily totals. The manual route. Accurate if done carefully, slow, and easy to get a day wrong.
• Import a file. Many tills export a daily summary or journal as a spreadsheet you can import.
• A direct link. The till sends each day to your accounting software automatically, usually as one journal per day.

Journals or invoices?

Some till systems send every sale to your accounting software as its own invoice. For a café with 300 sales a day, that is over 100,000 invoices a year, which clutters your books and slows reconciliation.

Most accountants prefer one summary journal per day: the day's takings split by how they were paid on one side, and sales before VAT, VAT, service charge and tips on the other. It matches the Z-read and is far easier to check.

A worked example in pounds

Here is one day's takings for a café, as a journal. The day's total is £1,240.

What came in (debits):

• Card: £980
• Cash: £190
• Delivery app: £70
• Total: £1,240

What it was for (credits):

• Sales before VAT: £1,000
• VAT: £160
• Service charge: £45
• Tips: £35
• Total: £1,240

The two sides add up, so the journal balances. The VAT is £160 on £1,000 of sales rather than £200, because some of the day's sales were zero-rated cold takeaway food.

Now the time saved. Typing one day into the accounting software takes perhaps 5 minutes, plus checking. Over 360 trading days that is 30 hours a year. At a bookkeeper's rate of £25 an hour, that is £750 a year, before you count the time spent finding mistakes.

Questions to ask before you choose

1. Does your accountant use it? Sharing books is easier if they do.
2. Does your till connect to it, directly or by file?
3. Does it file VAT returns under Making Tax Digital?
4. Does it have bank feeds for your business bank account?
5. Can it handle more than one site if you plan to grow?
6. What does it cost each month, and does your bank or accountant offer a discount?

How it works in Café QR

Café QR sends each finished day's takings to your accounting software as one balanced journal, so the books are up to date before you open.

• QuickBooks Online and Sage Business Cloud Accounting, directly. Connect once from Accounting, and every night Café QR sends each finished day that hasn't gone yet, oldest first.
• Xero and any other package, by file. Download the same daily journals as a spreadsheet from Reports and import them. A direct Xero connection isn't switched on yet.
• One journal per day. Payments by type on one side, sales before VAT, VAT, service charge and tips on the other. A split bill is shared across the ways it was paid.
• Match your accounts first. Choose which ledger account each line goes to. Check my accounts match tests the mapping without sending anything, and nothing is sent until every account name matches.
• Never sent twice. Each day carries a reference, so a day that has gone isn't sent again.

Accounting comes in the "Insights and accounting" add-on at £8 a month, in Profit & Compliance at £19 a month, and in the Multi-site plan. Café QR sends sales only: supplier bills, wages and bank reconciliation stay in your accounting software. See how accounting sync works in Café QR.

Related reading

• Café Profit Margins
• VAT on Takeaway Food: Hot, Cold, Eat-In and Delivery
• How Much Does an EPOS System Cost in the UK?